Friday, June 19, 2015

All Mathy and No Place to Go

If you're having trouble understanding Paul Romer's elaborations on mathiness, this post from last week probably won't help much either. As Romer admits, he's fighting mathiness with wordiness, and for me the words aren't always making sense.

Here are some of the words which seem to be at the heart of his argument, which is a response to David Andolfatto's post:
The provably false statements that economists like Andolfatto make (and he is certainly not alone) may be more than mere signals. They might be an irreversible commitment to stay at an institution where his club is already in control because they prevents someone from ever being employable at a competitive institution where logic is still valued.
I read that several times, and I think I'm closer to understanding it than after my first shot at it, but I'm still not quite clear on what Romer is trying to say. Let's work through this:

1. "The provably false statements that economists like Andolfatto make..." Andolfatto made some statements. They are "provably false" statements, which would be a bad thing if it were true, especially if David knows they are false. Then David would be a liar of course. Further, there other economists "like Andolfatto" who are doing the same thing. He's apparently a member of an identifiable group of economists who are doing something systematic, perhaps knowingly making false statements. Potentially we have a group of lying scoundrels on our hands.

2. "...may be more than mere signals." So making false statements is a signal of something, according to Romer. If you have been reading Paul's missives, you'll know that a "provably false statement" is a signal of a general state of "mathiness," an affliction - indeed, potentially a conspiracy to deceive - whereby the perpetrators subdue unwitting readers with a torrent of impenetrable math designed to cover up poor economics.

3. "They might be an irreversible commitment to stay at an institution where his club is already in control..." The institution is the place where Andolfatto and his ilk work, apparently. There may be a club controlling the place where he works, and possibly David has made an "irreversible commitment" to stay there - on the scale of a pact with the devil. David went down to the crossroads, and came back playing some serious bottleneck guitar, but at what cost?

4. "...because they prevents someone from ever being employable at a competitive institution where logic is still valued." This is the cost. Make "false statements" and you're stuck working where you're working now, because people who work in places where "logic is still valued" won't hire you.

Well, as far as I can tell, Paul Romer's drive for an eradication of "mathiness," and his support of "truth," and "norms of science," has little to do with valuing logic, and everything to do with Paul's own professional disputes, which are really of little interest to most of us. It's nice that people have an opportunity to discuss the economics of growth and innovation, which is fundamental in economics - though we perhaps have not progressed as far as we might have hoped in understanding it. But Romer's conspiracy theories are an a par with grassy knoll theories. Start probing, and there's nothing there. In particular, there are no falsehoods in Andolfatto's blog post, as far as I can tell. I disagree with David on a daily basis, but he's one of the more honest and un-clubby economists I have known in my professional career. How many other economists attach their names to their referee reports?

So, my advice for Paul Romer is to lighten up. I think he would rather be remembered for his fine early-career research on economic growth than for late-career grumpiness and nastiness.

10 comments:

  1. "I disagree with David on a daily basis, but he's one of the more honest and un-clubby economists I have known in my professional career."

    Nope. You an Andolfatto belong to a particular school of thought in econ (that schools of thought exist is nothing special or extraordinary for a social science.) whereas Romer, as well as other folks you disagree with, belong to others. Gee, that's what most of these debates are actually about: fundamental differences between schools of thought concerning methodology and axioms.

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    1. In my experience every "school of thought" has one member. I've been around places which are supposed to be schools of thought, and found a lot of diversity in how people think. I think you're prejudiced.

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    2. "...whereas Romer, as well as other folks you disagree with, belong to others."

      Let me guess. You probably think that David and I are Chicago school and Romer is something else. David was a student at the University of Western Ontario. I went to UW-Madison, and a guy I talked to a lot as a student was Mark Gertler, a noted New Keynesian. Romer actually has two degrees (undergrad and PhD) from Chicago, and he also held an academic position there. So what are you talking about?

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    3. "Schools of thought" only exist in the minds of people who want them to exist so they can have someone to blame when their crappy ideas aren't adopted immediately by everyone.

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    4. "Schools of thought" is a very old-fashioned idea. In the 1950s, when people communicated by snail mail and did not travel as much, you would indeed be influenced primarily by the person in the next office, and a school of thought would emerge. It's silly to think of things in that way now.

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    5. It is silly to ignore the obvious difference between saltwater and freshwater economists. Both sides claim that the other side is engaged in pseudo-science. Krugman doesn't take you seriously and vice versa.

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    6. The facts disagree with you: http://aalto-econ.fi/tervio/CitationClusters.pdf

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    7. "It is silly to ignore the obvious difference between saltwater and freshwater economists. Both sides claim that the other side is engaged in pseudo-science. Krugman doesn't take you seriously and vice versa."

      Saltwater/freshwater is a term Bob Hall made up in the 1970s, and it does not apply today, among practicing macroeconomists. Krugman of course is no long practicing. He's now a journalist, and his ideas about the state of the macro profession come from - the 1970s.

      "The facts disagree with you: http://aalto-econ.fi/tervio/CitationClusters.pdf"

      That's their interpretation of the "facts."

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  2. Cattaneo in 1861 distinguished the physics of wealth from the psychology of wealth. In modern jargon, the physics is like the inputs and the psychology is the TFP. The fount of TFP is entrepreneurship and Austrian economists have argued this is not capable of being modeled mathematically. The failure of the modern growth theory program to date indicates they are correct.
    Smith showed in 1776 that we do know a bit about the nature and causes of wealth of nations. Modern growth theory has not added anything to that. Math helps not at all. Romer was smart enough to realize that and struck off in a different direction.

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  3. Romer's posts are getting increasingly disappointing. He keeps making a very big deal out of something that to me seems trivial. We all know that most sellers have at least some marker power. Perfect competition is very rare. Does Romer object to every model that assumes a can opener, sorry, a perfectly competitive market? I don't think so, since even in his own model the final good is produced by a singe perfectly-competitive (apparently the contradiction did not bother him there) firm.

    As far as Boldrin and Levine are concerned, their paper makes an interesting point. That even when there are many firms and no administrative barriers to entry (e.g. patents) so that each firm is a price taker, if there are capacity constraints then the price will be above marginal cost and hence the innovator may be able to cover the fixed cost associated with a new invention, depending also on how fast the rate of imitation is. This issue is of particular importance to markets like pharmaceuticals, where empirical economists and economic historians who are not vested in a particular mode of formal theorizing have questioned whether, given the time it takes to reverse-engineer and start producing a new drug, patents are really necessary. Here is an example:
    http://icc.oxfordjournals.org/content/20/3/721.abstract

    It is a pity that Romer stayed away from this question and in turn focused on...a can opener.

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